Iron Peters Out

A small increase in Malaysia’s production of iron ore last year has proved deceptive, as the experts expected it would. When the mines at Bukit Besi, near Dungun, close down – the same fate apparently lies in wait for the Rompin mine – there will be substantial fall in production, and no hope of recovery. Already annual production, at just over five million tons a year, is down by a third on the boom years of the middle sixties and the value of exports, all to Japan, have declined from $176 million to just over $110 million. The dissappearance of the Dungun and Rompin iron will slice these figures by another one third, and threaten disaster to two prosperous communities of thirty thousand people.

Can these mines be saved? The Trengganu and Pahang state governments can depend on the central government’s support, and even its financial assistance, if a practical plan can be found. The state governments face a serious loss of revenue from royalties, and relatively heavy capital expenditure for the resettlement of 4,500 men (and their families) directly employed by the mines. The workers at Bukit Besi are prepared to put $3 million of their own money into co-operative company run as a joint venture with the Trengganu government. They would prefer no doubt to see the mine become entirely a state enterprise. And the vice-president of the mining industries’ union estimates that Bukit Besi is still good for a million tons of ore a year.

This is doubtful. In any case, for how long? An even more important question is who would buy it? The Japanese, with supplies assured from Australia, won’t renew their contract, a primary reason for the decision to close the mine. The Japanese were the original developers of the East Coast iron mines, back in the thirties, when no-one else was interested. Any plan to keep the mines going will depend on finding first a guaranteed market. Without this certainty it will be better to concentrate at once on alternative schemes. Most of the land in this part of the East Coast is fertile (too good for rubber, say the experts) and palm oil and agricultural crops are the answer.

Iron ore is not the treasure it was. Intensive prospecting has not disclosed any size\able further deposits, and some of the earlier calculations of the iron in Perak and Johore apparently were a little too optimistic. The Ministry of Lands and Mines in a January estimate warned that the known reserves would not last more than another five years. Since then two of the smaller mines near Ipoh have closed. The suggestion that Malaysian ore should be smelted in Malaysia has been made from time to time, and Singapore might be interested, for the quality of most of the ore is high. But propositions that may have had their attraction when reserves were thought to be larger, and the geologists held out the half promise of more, look rather different today.

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